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David Arthur Walters

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Allen Stanford and A Fishy Paper
By David Arthur Walters
Last edited: Monday, May 17, 2010
Posted: Monday, May 17, 2010

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• Vituperative Recriminations
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           >> View all 346
SERIES: ‘As the Press Spins – Anatomy of an award-winning expose


On May 5, 2010, independent journalist David Arthur Walters asked Anders Gyllenhaal, senior vice president and executive editor of The Miami Herald, for copies of documents or any other evidence whatsoever that would support the newspaper's oft repeated claim that former Florida banking director and attorney Arthur M. Simon, approved of an illegal agreement with fraudster Allen Stanford's Stanford Trust of Antigua to set up an illegal office in Miami to swindle Mr. Stanford's victims, and that he did so over the objections of then chief banking counsel, Richard T. Donelan.


"The Miami Herald won the Society of Professional Journalists' prestigious Sigma Delta Chi award for exposing sweeping government failures.... Reporters Michael Sallah, Rob Barry and Lucy Komisar were recognized for their stories revealing how Florida regulators permitted the now disgraced banker - over the objections of the state's chief banking counsel - to open an unregistered office in Miami a decade ago.... The reporters...showed how lawyers...helped protect Stanford from government scrutiny while he was expanding his fraudulent banking network around the world.... "May 4, 2010


"Over the objections of the state's chief banking lawyer, Florida permitted the banker to operate without any fraud checks or money laundering requirements, in violation of state and federal law, the newspaper found.... Richard Donelan, the state's chief banking counsel, tried at least four times to change the agreement that gave Stanford the freedom to send millions of dollars to Antigua in total secrecy. In one draft, he questioned why the state wasn't requiring Stanford to get licensed for sending money - which would have brought his office under government regulation. But nothing was done." January 10, 2010


"Sink's comments came days after a Miami Herald investigation revealed regulators allowed Stanford in 1998 - over the objections of Florida's chief banking counsel - to open a Miami center to attract wealthy Latin Americans to invest in his Antiguan bank.... Sink said she was disturbed that Florida banking officials approved the Miami office, despite concerns by state banking counsel Richard Donelan, who said the arrangement violated state law." July 9, 2009


Mr. Gyllenhaal has not responded to Mr. Walters' request. The documents which the Miami Herald had in its possession or were readily available when it published its scandalous award-winning series clearly demonstrate that the agreement was not illegal. And the paper had no evidence of express disapproval by Mr. Donelan of Florida's deal with Stanford Trust, on or before the agreement was made, simply because no such disapproval was expressed in writing, a fact verified by the Office of Financial Regulation after a careful search for same:


"Despite diligent searches, we have never been able to locate any written legal opinion from Mr. Donelan on the matter and have concluded that no written opinion was issued," stated the OFR on April 30, 2010


The Miami Herald writers and editors cast Mr. Simon as the chief villain in its attack on the State of Florida vis-à-vis its former banking division, since merged into the Department of Financial Services now headed by Democratic gubernatorial candidate Alex Sink. "State aided suspect in huge swindle," screamed the headline (7/5/09). "Alex Sink - Probe Allen Deal," (7/9/09). "How Florida blew chance to stop Stanford," (7/19/09).


The "objective" editors and investigative reporters at McClatchy's liberal Miami paper probably thought that the leaders of the vast right-wing conspiracy, led of course by President Bush at the national level, and his brother Governor Bush in Florida, were in cahoots with Allen Stanford. Had not President George W. Bush himself in 2008 praised on White House stationery the Stanford Group for helping individuals and families to strengthen their financial security? "By providing investment and wealth management services, companies like yours are helping more Americans build a solid foundation for the future."  


Perhaps the Miami Herald reporters suspected that Mr. Stanford had had his Greenberg Traurig pettifoggers give Mr. Simon a brown bag full of bearer bonds for lunch at the swank Greenberg law offices downtown. Or maybe Mr. Stanford himself had made a blood-brother of Mr. Simon, sharing bodily fluids with him in a Miami airport hanger. And they must have burned several barrels of shredded documents, including Mr. Donelan's objections, in a Florida swamp.


However that might be, now was the time for Alex Sink to mount an anti-corruption plank, denounce the very agency she heads, and ride the forces of reform to victory over the naturally corrupt Republican candidates - mind you that the only reason the vast majority of prison inmates are Democrats is because the Republicans are in charge of the penal system.


Lead investigative reporter Mike Sallah was hot on the political trail:


"At one point," Arthur Simon stated on May 11, 2010, "The Miami Herald was also pursuing a possible 'Jeb Bush connection' to the Department's approval of the Stanford TRO [trust representative office]. I was called one day and asked by Mr. Sallah whether I received any pressure from Jeb Bush or the Governor's Office to approve the TRO. I told him, 'absolutely NOT.' I received no communication whatsoever from anyone outside the Department of Banking and Finance about the pending matter. In fact, I never received any communication from the governor or anyone on his behalf on ANY pending regulatory matter EVER during my tenure as director of the DBF, Division of Banking."


Mr. Simon is now a professor of political science at the University of Miami in Coral Gables, and was highly esteemed prior to the breaking news of the scandal. But his reputation has undoubtedly been tarnished by the charges by the Miami Herald and the replication of those charges throughout the nation by media parrots and Internet conspiracy theorists, one of whom has mentioned Mr. Simon in reference to President Bush's alleged ties to the opium business in Afghanistan, and to former Greenberg Traurig lawyer Carlos Loumiet, allegedly the mastermind of Stanford's legal strategies in Antigua and Miami, and to a Stanford home in Coral Gables.


Despite the lack of any written evidence prior to the signing of the 1998 agreement, the Miami Herald reports in its July 5, 2009 assertion that the State of Florida "aided suspect in swindle," that Richard T. Donelan said he had objected to it several times:


“‘There was no lawful way that office should have been opened,' said Richard Donelan, the state's chief banking counsel who opposed the deal. Donelan said he argued that the Stanford plan violated state law, and that there were concerns about money laundering in the Caribbean and 'whether Stanford's bank was in conformance with the law.' …Donelan, the state's chief banking counsel, said he did not believe Stanford had the right to open the satellite office in the first place. 'It was not an American financial institution. I had expressed that opinion. There was no regulation. It was as if they had an office that could be selling shoes or ice cream.'"


The Miami Herald apparently made no effort to corroborate the statements elsewhere, and went ahead and published the damning assertions without obtaining and publishing Mr. Simon's objections, which make it obvious that Mr. Donelan's memory did not serve him well in the midst of a breaking scandal in which he himself could be attacked by the press a decade after the agreement was signed. No doubt he had expressed oral reservations when it was noted that the trust office to be established was for an offshore entity, hence some wrangling took place between Mr. Donelan and the Stanford Trust lawyers, and Mr. Donelan evidently approved of the final agreement and it was sent along to Mr. Simon for his signature.


"There is no documentary evidence whatsoever," asserted Mr. Simon, "to substantiate repeated assertions in The Miami Herald that I approved Stanford's trust representative office over the objections of the Department's chief banking counsel.... Needless to say, it is somewhat disquieting that the Department attorney who negotiated the Stanford MOA (Memorandum of Agreement) with opposing counsel, and who approved the agreement for form and legal sufficiency just prior to its submission to me, as Banking Division Director, for signing, now opines, over a decade later, that Stanford's trust representative office in Miami was illegal and/or that I never should have signed the MOA."


Mr. Simon, who described Mr. Donelan as "a fine and capable attorney," and "a thoughtful and congenial colleague" with whom he had worked on important banking matters during his tenure as banking director, must have been more than upset by the Miami Herald's publication of Mr. Donelan's alleged remarks and the paper's continuous defamation of his character, but he would say no more about his emotional experience than that he was "disquieted."


"It is abundantly clear," he insisted, "that the Department's chief banking counsel, Richard Donelan, negotiated terms and conditions of the December 1998 Memorandum of Agreement with counterparts from Greenberg Traurig - Stanford's Miami-based law firm. Because Mr. Donelan had very little knowledge about operations of trust representative offices, he was assisted by David Burgess, the Department's senior trust company expert."


He cited an December 7, 1998 email from David Burgess to Richard Donelan regarding Greenberg Traurig lawyers Seann Frazier' and Carl Fornaris' calls asking to talk about trust representative offices:


"I'm reluctant to respond to these folks," wrote Mr. Burgess, "I don't want to get into something I shouldn't. Should we talk tomorrow; do you want to respond to these folks; do you have any other advice to offer - HELP. Thanks."


The response from Mr. Donelan to Mr. Burgess came the same day:


"David: Let's discuss this in the AM. I do not consider myself an expert on either the number of or the business of trust rep offices.... As for talking with Frazier, you are under no obligation to chat with him. Frazier was asking me about what trust rep offices are all about. He might as well have asked me about reconnaissance satellites...."


"Obviously," Mr. Simon said, "as late as December 7, 1998, less than a week before the agreement was finalized, the Chief Banking Counsel was still somewhat in the dark about TROs in Florida. On December 10, 1998 Seann Frazier, Esq. transmitted a draft 'Memorandum of Agreement' to Richard Donelan, Esq. Then DBF attorney Donelan and FCA Burgess made numerous additions, deletions and revisions - mainly to address technical legal issues. This back-and-forth activity soon culminated with a final draft, which was presented to me for signature. If there was a sound legal reason why the MOA should NOT be singed, the bases for any such objections should have been set forth in writing and submitted to me by Mr. Donelan in a timely manner. But Mr. Donelan NEVER submitted any such documents. Therefore I signed the MOA in my capacity as Director of the Division of Banking, in accordance with standard DBF operating policy.


"If in fact," he continued, "I was inclined to approve the MOA over the objections of the Department's chief banking attorney (as the Miami Herald contends), without a doubt Mr. Donelan would have documented his objections and concerns. However, the administrative record is devoid of any such formal legal opinion, and written memorandum from Donelan to me as Division Director, any email to his immediate supervisor (Harry Hooper, DBG General Counsel), and email to my immediate supervisor (Deputy Comptroller Craig Kiser), nor any written communication of any nature whatsoever from attorney Donelan to the Department head (Comptroller Bob Milligan) substantiating his objections let alone the legal authorities to support his position."


Now that the reader has seen both sides of the story regarding the Miami Herald’s pillorying of Mr. Simon, she can draw her own conclusions. If something smelled fishy about the paper before, now she knows why, and is advised not to believe everything she reads in the paper, especially award-winning articles



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